Illegal tobacco accounts for 50% of the market in Australia

Aug.07.2025
Illegal tobacco accounts for 50% of the market in Australia
Illegal tobacco trade in Australia reaches more than 50%, prompting concerns over policy failures and rising organized crime.

Key points:

 

Illegal Tobacco: In Australia, the proportion of illegal tobacco has surpassed half, reaching 50% in June 2024, far exceeding the 14% in 2018. Nicotine consumption has reached a historic high. 

Policy failures: High consumption taxes and bans have fueled illegal trade, leading to the government's tobacco tax dropping from 160 billion Australian dollars (approximately 104 billion US dollars) in 2019 to 74 billion (approximately 48 billion US dollars) this year. 

Crime escalation: Gangs make an annual profit of 100 billion Australian dollars (approximately 65 billion US dollars) through illegal tobacco, leading to cases of arson, murder, robbery, and violence. Robberies in Victoria have increased by over 150%.

 Industry impact: Legal tobacco retailers have seen a significant drop in sales, with employees experiencing traumatic robberies. Some businesses are considering ceasing tobacco sales. 

South Australia's experience: Establishing a 45-member specialized enforcement team with warrantless search powers, shutting down illegal shops, and driving up legal sales. Other states have yet to follow suit.


According to ABC report on August 4th, currently, illegal cigarettes evading consumption tax account for half of the cancer-causing products sold to 2.7 million smokers in Australia.

 

Research released by FTI Consulting shows that the percentage is expected to reach 39.4% by 2024, a significant increase from 14% six years ago. The latest data for June indicates that this percentage has now risen to 50%.

 

Furthermore, according to wastewater research, nicotine consumption in Australia (including e-cigarettes) is at its highest level in history.

 

We can now conclude that the strategy of using taxation and bans to eliminate nicotine addiction has completely failed.

 

As a result, organized crime is able to generate an annual income of approximately 10 billion Australian dollars (approximately 6.5 billion US dollars).

 

Selling drugs may lead to long-term imprisonment, while selling cigarettes and e-cigarettes, even if unlucky enough to be caught, only results in a fine.

 

This means that income earned by criminals in Australia has reached unprecedented levels, leading to a sharp increase in the number of crimes being committed and the growing boldness with which they are carried out.

 

Competition in this "industry" is not resolved through price wars or with the help of the Australian Competition and Consumer Commission, as those involved are members of rival gangs. Instead, competitors may resort to arson attacks on each other's shops, or, as happened last week, allegedly plan to murder the employees of their rivals.

 

Over the past few years, there have been 125 cases of tobacco shop arson in the state of Victoria, and approximately 50 cases in other states - the most recent of which occurred last week in Corrimal, New South Wales.

 

The number of robberies continues to increase.

 

Since February 2024, violent robberies in the state of Victoria have increased by over 150% due to tobacco-related crimes.

 

Viva Energy, the company that operates Australia's largest chain of gas stations and convenience stores, reported in its half-year performance report that its tobacco sales decreased by 27% in the past year due to the expansion of illicit tobacco trade.

 

For Vivar Energy, the issue goes far beyond money: its gas stations and other convenience stores are now frequently targeted by gangs of teenagers wearing hoodies, wielding guns and machetes, robbing them, leaving employees deeply traumatized.

 

Large gangs are only targeting cigarettes - the entire store's inventory, because each pack of cigarettes sells for 57.89 Australian dollars (about 38 US dollars), and the inventory value can reach 100,000 Australian dollars (about 60,000 US dollars). By robbing five or six stores in one night, they can make a huge profit. The money in the cash register is simply not worth mentioning.

 

Consumption tax revenue has decreased.

 

The Albanian government is facing financial problems similar to those of Vivant Energy. In the current fiscal year, tobacco consumption tax is expected to be 74 billion Australian dollars (approximately 48 billion US dollars), which is a decrease from the 87.5 billion Australian dollars (approximately 57 billion US dollars) projected in the mid-year economic and fiscal outlook six months ago.

 

Theo Foukkares, CEO of the Australian Convenience Store Association, said that a turning point occurred in 2019 when the excise tax on cigarettes increased by 55% over three years, reaching $1.10 Australian dollars (about $0.70 USD) per pack.

 

As a direct result, the rise of illegal tobacco trade has led to a sharp decline in government revenue from tobacco consumption taxes, dropping from a peak of $16 billion Australian dollars (approximately $10.4 billion USD) in 2019 to $7.4 billion Australian dollars (approximately $4.8 billion USD) by 2025.

 

Despite the cost-of-living crisis, price is not the only factor driving people to turn to much cheaper illegal alternatives.

 

Firstly, illegal cigarette packaging does not feature gruesome images of oral tumors, making it more visually appealing.

 

On July 1, 2025, menthol cigarettes and cigarettes with mint flavor capsules in the filter were completely banned. In addition, tobacco companies are now required to print health warnings on the actual cigarettes, not just on the packaging — increasing costs.

 

Of course, illegal tobacco importers do not care about complying with the ban on mint-flavored products. They are even importing berry-flavored and mint-flavored cigarettes in hopes of attracting a younger consumer base.

 

The regulation requiring e-cigarette products with a nicotine content exceeding 20 milligrams to be purchased with a prescription has also proven ineffective. Only 700 pharmacies nationwide reluctantly sell these products, while in the same stores selling illegal cigarettes, these e-cigarettes can be easily purchased without a prescription.

 

It is estimated that Australia has 1.5 million regular e-cigarette users, in addition to 2.7 million smokers.

 

Legal stores may stop selling cigarettes.

 

The real danger now is that stores selling legal tobacco will give up this business, handing the entire industry over to criminals.

 

Gas stations find it difficult to do this because tobacco products account for 25-30% of their revenue; if they stop selling cigarettes, many gas stations may go out of business.

 

However, if the issue is not resolved, with more and more employees suffering from post-traumatic stress disorder, they will ultimately have to stop selling cigarettes.

 

By that time, Australia had essentially handed over the entire industry to gang members.

 

The fundamental issue seems to be that the federal government collects the sales tax, while enforcement is carried out by underfunded state police forces.

 

Illegal products are entering through ports in Australia, with importers suspected of evading taxes. Theoretically, two federal agencies - the Border Force and the Tax Office - should be handling this issue.

 

However, only about 1% of incoming containers are inspected by border force officials, and tax authorities lack both the resources and the willingness to investigate organized crime groups to recover tens of thousands of Australian dollars in taxes, risking their own doorstep being targeted with Molotov cocktails.

 

Once illegal tobacco enters the country, selling it does not constitute a criminal offense. However, destroying or burning down a competitor's store is a serious criminal act. Perpetrators of arson are difficult to apprehend, but it is not uncommon for them to accidentally set themselves on fire in the process.

 

In the 2025 budget, the federal government announced plans to allocate $156.7 million Australian dollars (approximately $101 million US dollars) for the "Illegal Tobacco Compliance and Enforcement Program," in addition to the $188.5 million Australian dollars (approximately $120 million US dollars) allocated over the four-year period from 2023.

 

Synthetic nicotine is expected to receive more relaxed regulatory policies in the United States.

 

We welcome news tips, article submissions, interview requests, or comments on this piece.

Please contact us at info@2firsts.com, or reach out to Alan Zhao, CEO of 2Firsts, on LinkedIn


Notice

1.  This article is intended solely for professional research purposes related to industry, technology, and policy. Any references to brands or products are made purely for objective description and do not constitute any form of endorsement, recommendation, or promotion by 2Firsts.

2.  The use of nicotine-containing products — including, but not limited to, cigarettes, e-cigarettes, nicotine pouchand heated tobacco products — carries significant health risks. Users are responsible for complying with all applicable laws and regulations in their respective jurisdictions.

3.  This article is not intended to serve as the basis for any investment decisions or financial advice. 2Firsts assumes no direct or indirect liability for any inaccuracies or errors in the content.

4.  Access to this article is strictly prohibited for individuals below the legal age in their jurisdiction.

 

Copyright

 

This article is either an original work created by 2Firsts or a reproduction from third-party sources with proper attribution. All copyrights and usage rights belong to 2Firsts or the original content provider. Unauthorized reproduction, distribution, or any other form of unauthorized use by any individual or organization is strictly prohibited. Violators will be held legally accountable.

For copyright-related inquiries, please contact: info@2firsts.com

 

AI Assistance Disclaimer

 

This article may have been enhanced using AI tools to improve translation and editorial efficiency. However, due to technical limitations, inaccuracies may occur. Readers are encouraged to refer to the cited sources for the most accurate information.

We welcome any corrections or feedback. Please contact us at: info@2firsts.com

Product | JNR Launches Crown Shisha 100K for International Wholesale, Pairing 58ml Capacity With Triple-Mesh DTL Design
Product | JNR Launches Crown Shisha 100K for International Wholesale, Pairing 58ml Capacity With Triple-Mesh DTL Design
JNR released the Crown Shisha 100K on August 14, 2026, positioning the ultra-high-capacity disposable around a direct-to-lung (DTL) e-shisha experience. The device combines a 58ml e-liquid capacity, triple 1.0Ω mesh coils and a 1,300mAh rechargeable battery, with JNR claiming up to 100,000 puffs. Adjustable airflow, battery and e-liquid status displays, a leather-style exterior and a shisha-inspired sound effect further differentiate the product. JNR is currently promoting the device through international wholesale and distribution channels, while a specific first retail market has not been disclosed.
Aug.31
Imperial Brands Sees Double-Digit NGP Growth as Sixth Year of Tobacco Revenue Gains Backs £1.5 Billion Buyback
Imperial Brands Sees Double-Digit NGP Growth as Sixth Year of Tobacco Revenue Gains Backs £1.5 Billion Buyback
Imperial Brands reaffirmed its FY26 guidance in its October 8 pre-close trading update, forecasting double-digit net revenue growth in next-generation products and share gains across heated tobacco, vape and modern oral. Tobacco net revenue is expected to grow at a low-single-digit rate, marking a sixth consecutive year of growth. The company has completed its £1.45 billion FY26 share repurchase and announced a £1.5 billion buyback for FY27. Group adjusted operating profit is expected to increase 3% to 5%, while free cash flow is forecast to exceed £2.2 billion.
Oct.09
Imperial Brands Acquires Helwit Owner Yoik Group for SEK 515 Million, More Than Doubling Swedish Nicotine Pouch Share
Imperial Brands Acquires Helwit Owner Yoik Group for SEK 515 Million, More Than Doubling Swedish Nicotine Pouch Share
Imperial Brands has agreed to acquire 100% of Swedish modern oral nicotine company Yoik Group AB for an initial SEK515 million, equivalent to about US$53.9 million, plus a deferred payment linked to performance over the next two years. Yoik owns nicotine pouch brand Helwit, which held about 3.4% of Sweden’s modern oral nicotine market over the past 12 months. Imperial says the acquisition will more than double its existing share of the Swedish market. Helwit is also sold elsewhere in the Nordics, through European online channels and in selected UK retail outlets.
Sep.08
PMI Pushes Smoke-Free Business in Latin America as Argentina Lifts Heated Tobacco Ban, Mexico City Share Tops 7%
PMI Pushes Smoke-Free Business in Latin America as Argentina Lifts Heated Tobacco Ban, Mexico City Share Tops 7%
Philip Morris International (PMI) showcased IQOS heated tobacco systems and nicotine pouch products at Technovation 2026 in Buenos Aires on October 7–8, presenting research on consumer attitudes, regulatory developments and illicit cigarette trade across Latin America. PMI Chief Global Growth Officer Stefano Volpetti said smoke-free products accounted for more than 7% of the Mexico City market. Argentina repealed its heated tobacco ban in May 2026 and introduced registration requirements for tobacco and nicotine products, while local media reported nicotine pouch sales in Mendoza. A PMI-commissioned survey found that only 8% of respondents across four Latin American countries were familiar with nicotine pouches. A separate KPMG study estimated illicit cigarette consumption at 77 billion sticks across 11 markets in Latin America and Canada in 2025.
PMI
Oct.13
China Tobacco Hubei explores staged nicotine pouch delivery, using dynamic membranes to slow early release and gradient particles to sustain later delivery
China Tobacco Hubei explores staged nicotine pouch delivery, using dynamic membranes to slow early release and gradient particles to sustain later delivery
China Tobacco Hubei Industrial Co., Ltd. disclosed several oral nicotine-related patent applications in August 2026, including two that approach staged nicotine release from different directions. One uses a high-viscosity membrane that forms inside the pouch after contact with saliva to slow rapid early release, while the other uses gradient particles with a faster-disintegrating outer layer and a slower core to create a fast-to-sustained release profile. Together, the filings explore how nicotine pouches could balance initial delivery with release later in use.
Sep.03
Spain Cigarette Volumes Fall 5.2% in August, BAT Drops 14.5%, JTI Gains Share; France Down 8.3% on Adjusted Basis
Spain Cigarette Volumes Fall 5.2% in August, BAT Drops 14.5%, JTI Gains Share; France Down 8.3% on Adjusted Basis
Spain's cigarette volumes declined 5.2% year over year in August 2026, according to government data cited by UBS and reported by Investing.com on October 7. British American Tobacco's volumes fell 14.5%, followed by Imperial Brands at 8.8%, Philip Morris International at 6.6% and Japan Tobacco at 4.6%. JTI was the only one of the four companies to gain cigarette market share, rising six basis points to 26.7%. In France, official customs data showed an unadjusted 3.7% decline in cigarette deliveries. Adjusting for the difference in delivery days produces a decline of approximately 8.3%, consistent with the UBS figure. The bank also estimated the earnings exposure of major tobacco companies to both markets.
Market
Oct.13